Germany and Ireland not keen on EU tax proposals

European Commission desire to phase in qualified majority voting faces uphill battle

German chancellor Angela Merkel and finance minister Olaf Scholz. Photograph: Fabrizio Bensch/Reuters

German chancellor Angela Merkel and finance minister Olaf Scholz. Photograph: Fabrizio Bensch/Reuters

 

Some EU finance ministers have given short shrift to proposals from the European Commission to end unanimity voting on taxation.

The ministers, meeting in Brussels on Tuesday, embarked on a preliminary discussion, without a vote, on proposals from economic affairs commissioner Pierre Moscovici to phase in over 10 years “qualified majority voting” into various aspects of taxation policy, traditionally a jealously guarded national prerogative.

On his way in to the meeting, German finance minster Olaf Sholz was careful not to disrespect his French colleague’s enthusiastic support for the move, but made it clear it was not something Germany was enthusiastic about. “It’s useful that now the commission took their right to start a debate. I’m sure we will not find a consensus today or in a short time. But it is right to start this debate,” he said, a view echoed by many states at the meeting.

France, Spain and Italy are understood to have expressed strong support for the commission.

Minster for Finance Pascal Donohoe was not present, but Ireland’s opposition to the move was expressed by permanent representative Declan Kelleher, who said the issue was deeply sensitive and touched on national sovereignty. Several important initiatives had recently been passed under unanimity, he pointed out.

No further discussions on the issue were scheduled by ministers.

Lane’s credentials

Meanwhile, commissioner Valdis Dombrovskis, whose area of responsibility includes financial stability, financial services and capital markets union, said the finance ministers had approved Central Bank of Ireland governor Philip Lane’s appointment as chief economist of the European Central Bank. He was convinced that “Mr Lane is the man we need”. Mr Lane’s appointment is due to be formally ratified next month.

Also welcoming the finance ministers’ backing for Mr Lane, Paschal Donohoe said: “Philip is a remarkably well-qualified candidate, and I am confident he would step up to the challenging post if appointed.”

The commission’s tax proposals come after several years of frustration for it in trying to push through proposals for common corporate taxation, most recently on digital companies. Ireland has led opposition to the measures, which have been stymied by the unanimity voting rule.

Critics say the Moscovici proposals, which mirror proposals proposed by commission president Jean-Claude Juncker on national vetoes over foreign policy, and which have little prospect of passing, are an attempt to establish a commission legacy as its term runs out.

Supporters point to the inefficiency of unanimity voting, which they say is holding up the integration of economic union.

Treaty changes

Through successive treaty changes over the past 30 years, decision-making procedures in other areas have evolved in response to economic, environmental, social and technological changes. “Qualified majority voting is now the standard rule, including for policies that are just as politically sensitive as taxation,” the commission argues in its paper to ministers.

It proposes a step-by-step transition.

First qualified majority voting should be employed for measures that have no direct impact on member states’ taxing rights, tax bases or rates, but that are critical for combating tax fraud, evasion and avoidance and in facilitating tax compliance for businesses in the single market.

Subsequently, it would be employed for measures primarily of a fiscal nature designed to support other policy goals such as environmental taxes.

By 2025 it proposes qualified majority voting for initiatives “which are necessary for the single market and for fair and competitive taxation” like the implementation of a common corporate tax base.